Chapter 10: Problem 1

Which statement is true? (LO1) a) All monopolists' products have close substitutes. b) Most firms in the United States are monopolies. c) There are no monopolies in the United States. d) A monopoly is a firm that produces all the output in an industry. e) None of the above.

Short Answer

Expert verified

The correct statement about monopolies is statement D: A monopoly is a firm that produces all the output in an industry.

Step by step solution

Assess Statement A

A monopoly is a market structure in which there is only one producer and seller of a product with no close substitutes. So, statement A is false.

Assess Statement B

Statement B suggests that most firms in the United States are monopolies. However, the U.S. economy is dominated by various market structures like perfect competition, monopolistic competition, and oligopoly. Monopolies are less common, so statement B is false.

Assess Statement C

Statement C claims there are no monopolies in the United States. While monopolies are less common, there are indeed some monopolies, particularly in industries with high barriers to entry, like utilities and telecommunications. So, statement C is false.

Assess Statement D

A monopoly is a firm that produces all the output in an industry, so statement D is true.

Assess Statement E

Statement E claims that none of the statements are true. However, statement D is true, so statement E is false.

Choose the correct statement

After assessing each statement, the true statement about monopolies is statement D: A monopoly is a firm that produces all the output in an industry.

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